Competitiveness of Global Apparel Industry: A Study Based on Transaction Cost Theory

Abstract

This article explores global competitiveness in the apparel industry and its implications on the competitive performance of China and Bangladesh through the lens of transaction cost theory (TCT). The study has been conducted based on qualitative method of social science research. The primary evidence for this study has been collected through semi-structured in-depth personal interviews with key resource persons in international trade. The study finds that rising competition in global apparel trade largely influences Bangladesh’s competitiveness in the apparel industry compared to China. However, China’s apparel industry faces challenges from rising production costs. It also finds that unrestricted trade flows among Asian competitors through bilateral and comprehensive trade agreements have severe implications on Bangladesh’s competitiveness in apparel sector, while trade protectionism remains the key barrier towards China’s share of exports in global apparel market. The findings of the study will be crucial for both Chinese and Bangladeshi policy makers and stakeholders to address existing impediments, including future challenges to gain a competitive advantage in their apparel exports. The study is among the first to compare the international competitiveness of apparel industries between the two major apparel exporting countries by using TCT.